Analysis of Excess Management Behavior of Controlling Shareholders of Listed Companies under Equity Pledge

With the vigorous development of China’s capital market and the increasing maturity of the securities market, a variety of financial instruments and financing methods have emerged. “Equity pledge” stands out among many financing methods due to its low financing costs, high financing efficiency, and greater flexibility and diversification, becoming the most favored choice for controlling shareholders of listed companies. However, because the equity pledge ratio of controlling shareholders in the company is often high, this not only provides a convenient financing channel but also exposes significant risks. Taking ST Xuefa, a textile and apparel company, as an example, this paper delves into the characteristics of equity pledge by the controlling shareholders of the company and focuses on analyzing the motives and preferred methods of earnings management by controlling shareholders of listed companies in the context of equity pledge.